Former Chicago alderman convicted of “false statements”
OPINION ANALYSIS
The Supreme Court on Friday overturned a ruling by a federal appeals court in Chicago that upheld the conviction of Patrick Daley Thompson, who served four months in a federal prison for making false statements to bank regulators about loans he took out but did not repay. The Supreme Court ruled on Friday that the federal law that was used to convict Thompson does not apply if the statements are misleading but not falsified. But Friday’s decision left open the possibility that when the case returns to the lower courts, Thompson’s conviction could nonetheless stand because his statements were false.
Friday’s ruling was the most recent of a series of rulings over the past several years in which the court has pushed back against a broader reading of federal criminal laws by prosecutors.
The case centers on statements that Thompson made to a loan servicer and contractors for the Federal Deposit Insurance Corporation when they were trying to recover money owed to the Washington Federal Bank for Savings, a small bank on Chicago’s South Side where the Daley family , the city’s most famous political dynasty, made its name. Thompson, the grandson of Richard J. Daley who was the mayor of Chicago from 1955 to 1976 and the nephew Richard M. Daley who served from 1989 to 2011 as mayor, took out three loans totaling $219,000 over a period of three years. Thompson did not sign paperwork for the second or third loan, and made only one payment in 2012.
The FDIC hired a loan servicer after the bank collapsed in 2018, and sent Thompson an invoice of $269.120.58. This included both the principal and interest on his loans. Thompson told both the loan servicer and two contractors for the FDIC that he had borrowed $110,000, which correlated with the amount of the first loan, for which he had signed paperwork.
Thompson eventually agreed to pay the FDIC $219,000 — the principal remaining on his loans, but not the interest.
Prosecutors charged Thompson with violating a federal law that makes it a crime to make false statements to influence the FDIC. He was convicted and sentenced to four months in prison.
Although Thompson conceded that his statements regarding his loans may have been misleading, because he did not mention his second and third loans, he maintained that they were not false, because he said only that he had borrowed $110,000 – not that he only owed $110,000. And therefore, he contended, he did not violate the law.
The lower courts rejected that theory, but on Friday the Supreme Court agreed with Thompson that the law under which he was convicted applies only to statements that are false.
Roberts pointed first to the text of the law, emphasizing that it makes it a crime to knowingly make “any false statement or report.” The law does not, he observed, “use the word ‘misleading'” – even though “false and misleading are two different things.” Indeed, he added, because misstatements can sometimes be true, “it is significant that the statute uses only the word ‘false,'” which “means ‘not true.'” Therefore, he concluded, a “statement that is misleading but true is by definition not a ‘false statement.'”
Federal laws more broadly support this result, Roberts continued, because other laws – including some criminal laws – do use the word “misleading” when Congress wanted them to apply to misstatements. Roberts pointed out that if the court had interpreted the law in this instance to apply to misleading claims, Congress would not have needed to include the word “misleading.” in other federal laws. Roberts argued that neither the trial court or the court of appeals had addressed this argument. Roberts said that when the case returns to lower courts, they can consider “whether a reasonable jury could find that Thompson’s statements were false.” Roberts suggested that when the case returns to lower courts they could consider “whether a reasonably jury could find that Thompson’s statements were false.” In Thompson’s case the trial court had instructed the jury it could only render a guilty verdict if Thompson made a “false statement.” It did not tell them that Thompson could also be guilty if he made misleading statements. Those instructions were the focus of two concurring opinions, written by Justices Samuel Alito and Ketanji Brown Jackson.
Alito stressed that because Thompson did not object to the jury instructions, “the question that the Seventh Circuit must address” when the case returns to it is “narrow,”: whether, looking at the evidence in the light most favorable to the government, “any rational finder of fact could conclude beyond a reasonable doubt that” Thompson’s statements were false.
In Jackson’s view, there is even less for the court of appeals to do when the case goes back to the lower courts. She said that the 7th Circuit shouldn’t interfere with the trial court ruling which upheld the guilty verdict. She said that the jury had already decided whether Thompson’s statement was false. If anything, the court of appellations could “properly assess” if any reasonable jury would have found Thompson’s statement to be false. This question, she felt, “is not open to reasonable debate.”
